Killing Used Games Won’t Help Gamers – It’ll Hurt

Though Microsoft was almost unbelievably bad at messaging during and after Tuesday’s reveal of Xbox One, the company has not done much to dissuade observers from concluding the system will come built with controversial features.

Among these issues, one of the most divisive is the possibility that Xbox One will kill used games deader than Dreamcast. While the general consensus is firmly against such a used title-blocking feature, some have actually voiced support for one.

The most prominent voice in favor of the proposed anti-used gaming features of Xbox One is Ben Kuchera of the Penny Arcade Report, who laid out his thoughts on the matter yesterday. While he presents a pleasing vision of the future of gaming, we have to respectfully disagree.

The problem with the article isn’t that it’s in favor of ending the used gaming market — everyone is entitled to like or dislike that possibility as they see fit, and the used games market certainly has its downsides for the industry. The problem is that it bases support for Xbox One’s apparent solution to used games on assumptions about the way the gaming industry will work in the future — assumptions that fly in the face of what history tells us about the way the gaming industry does work.

While it’s important to remember that none of what we’re about to discuss is set in stone (after all, Microsoft has gone out of their way to be as vague as possible about all of this), here’s an itemized rebuttal of the argument in favor of bringing used game sales to an end.

Assumption: Publishers will lower the $60 price point

“Once that secondary market is removed,” it reads, “you can suddenly profit from every copy of your game sold, and as profit margins rise it’s possible we’ll see prices drop.”

Like any other business, the publishers of the gaming industry have one overarching goal — profit.

Unfortunately, there’s just no incentive here for Microsoft to encourage a lower price point for games. Everyone is used to dropping $60 for Call of Duty, and publishers are not about to walk away from that. Instead, what publishers are seeing when they look at the Xbox One is the idea that they can save a lot of money on printing discs if they just sell the licenses online instead of the discs in a store. Not only that, but they’ll have the owners of the Xbox One over a barrel. Don’t like the prices? Too bad, you’ve got $400 or more invested in being Microsoft’s captive audience.

Ask yourself this question: When was the last time the price of anything new and popular went down? Currently, the difference between a digital copy and physical copy of a launch day game is nil, and the argument here applies at least as much there. Like any other business, the publishers of the gaming industry have one overarching goal — profit. Companies survive and attract investors by returning profits to shareholders. The more money you can make for your shareholders, the happier they’ll be. Happy investors means that CEOs and other executives get to keep their high-paying positions. That money won’t be going back to gamers in the form of lower prices; it’ll just be used to pad their bottom line, please their shareholders, and try to secure their jobs.

Assumption: The end of used games will mean more units sold

The article also argues that “removing the concept of buying a used game will lead to more sales for publishers,” an argument also popular within the industry itself. Of all the article’s points, this is perhaps the one with the least amount of precedent to rebut it. Even so, there’s plenty of anecdotal evidence out there that lots of people only get to play games when they’re cheap.

Used games represent a way for people who aren’t in a financial position to purchase $60 games at launch to get to play the games they want later. Call of Duty: Modern Warfare 2 is $19.99 on Steam right now, but you can buy the used 360 copy for $12.99 at GameStop. Likewise, a used 360 copy of Bioshock Infinite can be had for $37.99, instead of Steam’s $59.99. These are substantial price differences on games both old and new, and they represent something very important: access to games that isn’t available for some in a world where used games don’t exist.

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It’s rather disturbing how the Penny Arcade article seems to have been written without even the most basic contradictory evidence in mind. I almost never buy a console game digitally because they expect me to pay the same price, even though I’m giving up the ability to resell the game, share it with my friends, and I lose hard drive space, too. If companies were at all interested in sharing the profits from digital sales with us, we’d see a price difference day one, but we don’t . There is not reason to think this would not continue into the future, because these corporations are not your friend, they exist to make as much profit as possible.

I also have to say that “laughable” is the best way to describe the assumption that eliminating used game sales would reduce layoffs. Again, these are corporations looking to make a profit, and many of them only keep people around long enough to get the project out the door. A lot of those employees know that going in. A lot of the companies that had major layoffs shortly after a game came out also had games that were poorly received. Is it really that gamers are being “cheap” or is it that the game stinks? And I’d say it’s a gross distortion of expectations when we have companies like Square Enix saying that Tomb Raider failed to meet its goal, even though it sold over 3 million copies in one month. Used games have next to nothing to do with the honchos that don’t have a clue that not every game is going to sell COD numbers.

Michael

On May 24, 2013 at 6:02 pm

Well let me say this. I heard from someone the console is going to run $600 bucks and that games are going to be around 80-90 bucks. As for the charge for the extra user if they want to play is going to be 60 bucks. What needs to happen is for Gamestop prevent selling the xbox one console. I buy games but i split the price of it with my brother so he can also play the game. Now its pointless to buy games and both of these consoles because all the restrictions they implemented.

For me backwards compatibity is the main problem. Both consoles are preventing it because of there excuse that the new hardware prevents it. The PS2 was a great console because it was backwards compatible as well as the Gamboy and Wii. Every console that removed this option did not sell well because of it. It is important to have.

I kinda see killing the used game market as a double negative that doesn’t cancel out. First they will see a dip in sales, not everyone is going to pay top dollar for a game, people have lives. Second they will see another dip from loss of free advertisement. People who barrow games or buy used become fans of a game franchise, a.k.a people who will pre-order your game.

Now I don’t even wanna talk about how microsoft is mulling over a fee to charge an activation fee. The devs will see a little profit on 2nd hand games sales but microsoft is the clear winner. Now they get to charge an additional fee on top on xbox live, the licensing fee for any game to be on the xbox, and a 2nd hand reactivation fee. At this point I would have to advise people to move to the PC. At least I can share my steam account with my friends.

(I am an Xbox fan. I own around 20 games for my 360 and have been a customer for 11 years now)

I hope the Xbox One fails miserably, just like the Dreamcast did. It is disgusting that Microsoft is trying to push an online-only service based console like this.

You mean to tell me that if I go without internet for more than 24 hours my console basically becomes a useless piece of hardware? So if I move, my ISP has issues, decide to cut the internet from my monthly bill, or even go on vacation abroad & take my console with me in a camper… It becomes useless? Bull&@$^.

Then there’s the whole service-based functionality (same as online-only really). Just like this article says, if MS takes down servers for whatever reason, that console is now a decorative piece of memorabilia. What a waste of money.

Lastly, I didn’t partake in the used game market much in the last 10 years… But publishers & Microsoft already line there pockets with consumer money. Rendering the used-game market virtually non-existent will do nothing for the industry. Besides line there pockets with money.

Ha ha. Hahahaha. I just deleted a long and pained comment (before posting it) on how GameFront’s journalistic integrity on it’s online stuff was absent, in total contradiction to it’s magnificent print articles. I realised, you see, that the video work was done by Rev3Games…

And before all the libel suits come flooding in, remember that it was those corporate shills that simply brushed aside their own abuse, and the abuse of all us gamers, in favour of *not wanting a game console* but a less-helpful multimedia tv computer… in a review of a video games console. Their paychecks were very much doing the talking. It’s funny how self-aware they were of this; they actually talked about how people were calling them sellouts, then only minutes later did all of what I described above. Incredible. These people *really really do* think we’re THAT stupid; they aren’t making it up, it doesn’t appear to be a put-on. They really believe we’ll be abused extensively, losing our rights as consumers, and PAY FOR THE PRIVELAGE. By God this f|_|cked up world needs fixing.

Roy Batty

On May 24, 2013 at 11:28 pm

Meh

Never was a big fan of xbox (I have to pay for the honor of playing online? WTF). I think MS needs to take a cue from Wall Street. You see Wall Street doesn’t care about up or down markets (in fact they make more money in a down market). Why is this? Because win lose or draw in EVERY transaction they get a piece of the action.

What MS and steam should do is the same thing. Instead of killing used sales they should invoke a service fee for sold games. One user could pass the token to the next. Sure it would not be $60 but it would be a lot of $10s just for the transfer of used games plus the $60 on normal sales. This would generate a robust ecosystem.

Ah MS my old friend – you are like IBM in reverse. You see a future and then make every mistake possible in an attempt to get there.

On a positive note: perhaps this will enhance PC gaming – where anyone could in theory make a game and sell it. Hummm come to think of it maybe this is a ploy by MS to boost PC sales.

P.S. Yes I own a 360 – it sits right next to my PC – it is sad to see Skyrim (or anything else) on that ty platform compared to my ATI 5990 in HD. But hey game on.

This is a great article that very appropriate addresses all the missing information and a bunch of overly rosy interpretations of the few “facts” we have.

I have to say, this is one of the MANY reasons I have always preferred the PC for gaming. It is the closest thing we have to an open platform, and thus it is harder for people to pull shenanigans like this.

On the console, it is far too often easier for the Big 3 to collude rather than compete.

A huge share of the blame for this rests directly on the shoulders of Gamestop. They have made billions off used game sales and never made any effort to cut in the developers on those profits. That was a mistake.

Dach

On May 25, 2013 at 12:48 am

@Michael Heartman

http://youtu.be/gutCFMc5khY

I’m becoming increasingly irritable when someone jumps into a conversation about the newest consoles to talk about how great the PC is.

The PC has a slew of problems, barriers and difficulties that are completely different from the concept of the consoles.

We in the console community get that the PC has some neat tricks and abilities that consoles don’t. However [and I can not stress this enough] we seriously don’t need to hear about it every time we talk about Microsoft, Sony or Nintendo.

I dont see this as a big deal at all, but that probably because ive been dealing without used game market for the last 7+ years.

I started playing on the PC because i love RTS games, plain and simple. the controller just cant do RTS.
Since then i have been dealing without a used game market, so i think i can look at this from a more neutral point of view.

I understand that many gamers simply cant afford to buy a 60 dollar game, and that sucks. the used game market has a been a saving grace for you. what it hasnt been a saving grace for is the developer. a developer literally doesnt see a penny of a games used sale. At least with Steam making a game 10 bucks the dev sees money. Used game buyers literally do not support their hobby.

its essentially as bad as pirating on the PC for the developer. the difference of course being that game stop gets paid instead of no one. yet people feel like its morally higher because they paid someone.

If you kill the used game market, i would predict, at most, a 2-5% overall drop in game sales, mostly because people didnt play Super Combat Duty Bros: The Battlefield Calls 2 so they didnt preoder number 3.

People need to get it in their head. you not being able to buy a used game market really doesnt hurt EA or Activision that much. all it will do is kill Gamestop.

What needs to happen is Microsoft and Playstation getting Steam/Origin or their own variant on there. and have regular sales. Much better than the used game market

They should have just put 2 terabyte drives in this Xbox and went with a 100% digital download sales model. Nobody would have even complained about the death of used games.

Spenis

On May 25, 2013 at 10:52 am

@Derek: I’d disagree with you were it not for the fact that Xbox One needs an internet connection to operate anyway, so in that sense it wouldn’t make much difference if they went digital-only. If PS4 did it, on the other hand, people would rightly go apes***.

@Dach Seriously dude, take a chill pill. It works both ways. I tend to agree with him, and every time we have a article on the pc, we get console fanatics flooding us with reasons why the console is the only way to go. Gee, ya don’t think we get tired of it. Say what you want, but the console market is slowly turning into a pc market. Has been for years. The devs and even Sony and Microsoft are making comparisons, so just how do you expect not to see it in an article like this. We’ve been hearing for years just how dead the pc was and how great consoles are. Not looking quite as rosy now is it.
I do understand where your coming from though, you like console better than pc’s and that’s great. Just saying, it’s getting harder to tell the two apart any more.

Red Menace

On May 25, 2013 at 2:47 pm

Pretty sure I won’t be buying a next generation console.

gasmaskangel

On May 25, 2013 at 5:51 pm

What offends me about the idea of a console or corporation going out of its way to squish used game sales effectively through fiat is that it represents an unwillingness to compete. They don’t want to offer a better service than Gamestop, they just want used games dead.

Supposing that microsoft’s initiatives do in fact kill used games, publishers will absolutely not lower prices, they will not stop firing entire teams after a game is completed, they will do nothing the overly optimistic Penny Arcade report supposes because corporations are not, and never will be, smart. If they were, then they might try competing with the used games market by lowering the price of new games, or not jamming hundreds of millions of dollars into AAA games and then expecting every sapient life form in the galaxy to buy a copy.

Mark

On May 26, 2013 at 2:53 am

But once there sales figures start slowing down they will drop the price of a game to compensate, i think the new games market price will have to balance the price to fit the used, maybe not straight away until they ever figure it out the hard way or easy

lol

On May 26, 2013 at 4:41 am

lol. Stores that exist on selling other companies property are C-R-I-M-I-N-A-L-L-S. Deal with it. Nobody owns the games except the publishers, you pay the right to borrow it from them you retards. Besides, the only people who still buy used games are three year olds and dumbasses on low incomes who can’t afford it at full price. This will affect nobody, you stupid little babies. LMAO

Luther

On May 26, 2013 at 10:53 am

This console is going to cost a lot of people there jobs, GameStop might have to lay people off, Gamefly that lets you rent video games online could fall and so on.

folklore

On May 26, 2013 at 12:06 pm

@lol
If stores that sell other companies products are criminals, that makes you complacent in the crime by buying from them. Last i heard aiding a criminal is a felony.

*Sigh* It’s almost sad to have to say this to you, lol. I’d like you to take a few minutes and read this (http://en.wikipedia.org/wiki/First-sale_doctrine). Done? OK.

As you can see, the first-sale doctrine is a huge part of copyright law, and it says that once the copyright holder sells a work, its interest in that material object is exhausted, and the new owner can dispose of it as he sees fit.

Are you suggesting that Wal-Mart is violating copyright by selling game discs? Because if you are, wow.

Look around – there are a ton of people working part-time jobs or no jobs, and the game industry can ill afford to be alienating anyone in this kind of a market. Companies like MS need to realize that while games are fun, if they make folks choose between gaming and paying the bills, gaming loses out.

Freedonadd

On May 27, 2013 at 9:25 am

^^^ This.

And that, folks, is why EULA and any sort of statement Big companies tries to feed you are complete, total BS! There’s no law allowing any person or entity to just dictate whatever terms they’d fancy and make that legit. The only law we as citizens have to fully abide to is the constitution.

People were never given good enough incentives to keep hold of most games rather than trade in.
A game like GTA4 was a big game to start with and then offered decent expansion packs at decent prices. By the time I was done with this game it was virtually worthless on trade in and i couldn’t trade my expansion packs with it anyway.
If anyone needs to be blamed for the whole used game industry killing developers situation, its the developers who create games that are so shallow, they get traded in within 48hrs.

I remember before the Xbox 360 came out, you had to pay extra for the HDD and that the PSN was free with the PS3.

I remember so many people crying about it, but they ended up selling tons of the console anyway.

Kinda like now lol.

Headdesk

On May 28, 2013 at 5:05 am

Oh dear, lol is talking to himself yet again. What a sad little life he leads when he has to post TWICE in trollspeak before he’s had enough for the day. Surely it’s about time the mods did something about it?

Dan Miller

On May 28, 2013 at 5:48 pm

1. From your wikipedia legal citation (lol at that): ‘For the first sale doctrine to apply, lawful “ownership” of the copy or phonorecord is required. As §109(d) prescribes, first sale doctrine does not apply if the possession of the copy is “by rental, lease, loan, or otherwise without acquiring ownership of it.”‘
First sale doctrine could be removed from video games in as long as it takes for a lawyer to revise an agreement.

2. The theory on the price point is NOT that it will go down at launch, but that it will go down after sales slow. It’s a concept called tiered pricing, and exists in almost all software markets and plenty of entertainment markets as well. Pay 12 bucks to see a movie on release day once, or 10 bucks to rent it for a few days a few months later, or catch it for free on TV the following year.

#1 assumes that a judge ratifies that agreement. We’ve never had an EULA seriously challenged in court. I’ve always wondered how that would shake out.

#2 assumes that MS, while having every XBox One owner as a captive market that can’t buy used games anywhere else, will see fit to move the prices of their games down like GameStop does. I’m sure prices will go down as games age, but it’s VERY likely that there will be a hard floor around $19.99, like we’ve seen with the various ‘Greatest Hits’ programs, or with Call of Duty titles on Steam. Meanwhile, used copies can get down to $5 – $10 fairly regularly.

Aww the poor video game industry is all bent out of shape over used games. The suffering there enduring must be horrid. Lol..not. They have to go after the poor man that can only afford used games. Its almost like the rich blaming the poor why there not more rich.

Dan Miller

On May 29, 2013 at 1:40 pm

@ Ron

Fair counterpoint on the price issue. Clearly publishers would never go as low as some legacy titles do at used prices (that $1-10 range), though there is some evidence that this would happen if a transition to an all-digital model is complete (games on Steam hit this range with some frequency). And no, you’ll never get a lower price on launch day – but even used games don’t truly offer a lower price on launch day, with gamestop typically sticking to the same supply/demand price economics as publishers for at least a few weeks (even newly-release used games at gamestop are, at best, only discounted a few bucks). I think it’s an unfair treatment of the issue to dismiss the potential that different pricing structures would open up once the $1bn+ in used game revenue going to Gamestop could be controlled by the publishers instead.

On the EULA / License issue, I didn’t want to play the “lawyer” card because I think a lot of lawyers who run around and drop the L-bomb are just as likely to be uninformed as non-lawyers. Not the case here though, so I’ll drop the “I’m a lawyer” card. EULAs have been challenged in non-gaming, software contexts, and courts are very hesitant to strike provisions from an EULA, especially one that would go to the core of the property right such as the basic definition of ownership v license. Courts defer to contracts between two willing parties as a general rule. “Vernor v Autodesk” is still the biggest case on this point, with troves written about it online (try a google search for ‘techdirt vernor’). Enterprise software has been license-only for years now, but game publishers have been slow to dip into that realm for a while. Don’t get me wrong, there’s plenty to hate about companies offering the same product with fewer property rights for the same price. It’s just not illegal.

folklore

On May 29, 2013 at 4:28 pm

@ Dan miller.
While it is a quagmire to the EULA. So far european courts have actually ruled in favor of the consumer. The supreme court over there has actually even gone as far to say that digital games can be resold. http://www.destructoid.com/eu-court-rejects-eulas-says-digital-games-can-be-resold-230641.phtml
It is uncertain which way the USA courts will swing.

Dan Miller

On May 29, 2013 at 4:45 pm

@ folklore

You are certainly right to point out that the EU is more consumer-friendly on license skepticism, but that doesn’t diminish the steadfast-ness to which US courts have backed the opposite approach. I’m in the US, so it’s of little help here, but there is more hope in Europe. Check out this link for a contrast from a leading global law firm: http://www.cooley.com/showalert.aspx?Show=66847

It references the leading US case that I mentioned and summarizes it as well, so it’s a pretty current evaluation of the state of licenses.

It’s really a fascinating issue that goes to the core of publisher/developer motivations. Note the final recommendation in that article: hurry to a SaaS model. Regardless of what you can do with your next gen games, we will eventually make it to a point where all software is delivered over the internet, and the legal right to resell becomes mute when you can’t physically do it. This is just a painful transition point, too early to go always-online with 2TB harddrives in your consoles and all-digital games from a cost and lack of bandwidth perspective, but tremendous economic pressure to do so. So Sony and MS are straddling the line for the time being.

folklore

On May 29, 2013 at 5:28 pm

@Dan miller
Thanks for the link. It was certainly an interesting read, either way only time will tell whether the EULA will be held up, or not. I’m also in the USA though, i tend to focus more on world news instead.

I see what you’re talking about with Vernor v Autodesk. I still would want to see it specifically applied to games, as the MDY v Blizzard case was less straightforward about the license rights, although it still held that the Glider bot was infringing. It seemed to draw a line, although a blurry one, between violating the EULA and actual copyright infringement. Of course, I am not a lawyer, so my reading of it may be a bit off.

I think that there’s a huge gulf between what we as PC gamers have with Steam, and what the XBox One will offer. More on that to come.

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